Corliss Group Online Financial Mag, Hong Kong Jewelry Sales Hit the Rocks
Hong Kong Jewelry Sales Hit the Rocks
Nearly one year ago, year-over-year growth in jewelry sales was as high as 19%, said Sarah Quinlan, senior vice president for MasterCard Advisors, a division of the U.S.-based credit-card company. But according to a MasterCard report analyzing Hong Kong spending, that growth rate dipped below 6.4%, the average overall retail growth rate in the city last month.
For years, Hong Kong has seen waves of mainland Chinese tourists rushing across the border to buy gilt and gold watches, jewelry and more—a phenomenon that’s helped one local jewelry chain sprout some 80 stores in the city of 7 million, a number that outstrips even the city’s inventory of KFC branches. At this point, fully 23 cents out of every dollar in retail sales in Hong Kong is spent on jewelry, MasterCard says. (By contrast, that figure in the U.S. is less than 1 cent.)
Among growth in retail sectors from groceries to clothing, that of jewelry sales ranked dead last in December, Ms. Quinlan said. Growth “basically fell off a cliff” starting in July and has continued to taper since, she said, following a crackdown on corruption on the mainland.
“Since [jewelry] represents such a significant percentage of total retail sales here, that’s quite concerning for the overall Hong Kong economy,” she said. MasterCard’s report was based on data that included transactions made via the company’s payments network in Hong Kong, as well as estimates of other payment forms including cash and check.
Though 35 million Chinese tourists flocked to Hong Kong in 2012, they are spending less on big-ticket items, though they still account for as much as a third of overall local retail spending, according to Hang Sang Bank estimates. Earlier this month, Hong Kong’s leader announced plans to try to further attract high-spending tourists seeking to spend their cash, possibly through the construction, officials said, of more luxury hotels.
Apart from spending by high-flying Chinese consumers, typical Hong Kong residents also literally tightened their belts last month, said Ms. Quinlan. After jewelry, the second-weakest category of growth they saw, she said, was in grocery spending, while the strongest was for health and beauty spending.
Still, the report’s authors said they believe spending in Hong Kong is slated to pick up in the first quarter, thanks in part to growth in U.S. consumer spending, the effects of which they expect to ripple out to Asia. In particular, Ms. Quinlan said, the fact that spending on airline tickets was the highest-growth category in the U.S. in December reflects mounting consumer confidence. She also expects a further boost in U.S. consumer spending a couple months from now on food, lodging and more when people start taking the trips they’ve booked.